IMPACTS OF IMMIGRATION ON WAGE LEVELS (Research Paper Sample)

IMPACTS OF IMMIGRATION ON WAGE LEVELS Student’s Name Professor’s Name Course Name Date Substitutes and complements The effects of immigration on the labour market of the host country majorly depend on among other things the skills of the existing workers, the skills of the migrants and the structure and features of the host economy. These effects also shift between the short run and the long when the country’s labour and the economy can adjust to the increase in labour supply. In the short run, the labour market will shift to reflect the ability of migrant labour to substitute or complement existing labour (Borjas 1995). In the event that migrant skills substitute existing skills, then we expect the labour market to experience a lot of competition, a case that will scale down wages in the short run. The degree of effects on wages will depend on the closeness of the substitute and the level of unemployment among the domestic workforce will be determined by their ability to accept the new wages. In the event of host and migrant skills complementing each other, both sides experience an increase in productivity which translates to an increase in the wages of existing workers. In summary, the forces of demand and supply of labour will play a major role in setting the equilibrium quantity of labour and the wages. Increased production and employment opportunities An increase in migrants comes with an increase in consumer demand for goods and services. Consequently, in the long run immigration will lead to setting up of new restaurants, stores and production facilities hence increasing levels of investment. Availability of cheap labour also help spur business opportunities. With an increase in business and employment opportunities which in turn lead to an expanded economy, demand for labour raises and thus increase wages in the economy. Additionally, immigration is known to change the mix of goods and services at are produces in an economy (Dustmann, Glitz and Frattini 2008). For instance increase in low-skilled labour leads to increase in the production of goods that use low-skilled labour intensively. This will in turn cause an expansion in the sector, increase demand for labour and rise wa...